Citation NR: 9713780
Decision Date: 04/23/97 Archive Date: 05/01/97
DOCKET NO. 94-00 373 ) DATE
)
)
On appeal from the
Department of Veterans Affairs Regional Office in
Indianapolis, Indiana
THE ISSUE
Entitlement to waiver of recovery of overpayment of
compensation benefits in the amount of $6,894.20.
REPRESENTATION
Appellant represented by: Disabled American Veterans
ATTORNEY FOR THE BOARD
Daniel G. Krasnegor, Associate Counsel
INTRODUCTION
The veteran served on active duty from April 1966 to November
1967.
This matter comes before the Board of Veterans’ Appeals
(Board) on appeal of a March 1993 determination by the
Committee on Waivers and Compromises (Committee) at the
Department of Veterans Affairs (VA) Regional Office (RO).
This matter was previously before the Board in November 1995,
at which time it was remanded to the RO for further
evidentiary development.
CONTENTIONS OF APPELLANT ON APPEAL
The veteran maintains that he notified VA of his divorce by
letter at the time that it happened. He states that he has
been dealing with VA for 25 years and that he is insulted
with the “bad faith routine.” As a result, he argues,
recovery of the overpayment assessed against him should be
waived.
DECISION OF THE BOARD
The Board, in accordance with the provisions of 38 U.S.C.A.
§ 7104 (West 1991 & Supp. 1996), has reviewed and considered
all of the evidence and material of record in the veteran's
claims files. Based on its review of the relevant evidence
in this matter, and for the following reasons and bases, it
is the decision of the Board that the weight of the evidence
is against the veteran's request for a waiver of recovery of
the $6,894.20 overpayment.
FINDINGS OF FACT
1. In a February 1968 rating action, the veteran was granted
service connection for residuals of a gunshot wound with
acquired absence of the left leg.
2. The veteran married Karen in June 1969; he notified VA of
the marriage, and was awarded additional benefits; he was
notified that he was in receipt of additional benefits and of
his duty to inform VA of any changes in his marital status.
3. The veteran married Shirley in April 1975 and was
divorced from her in June 1978; an overpayment was created in
April 1984, since the veteran failed to report his divorce
from Shirley until April 1984.
4. The veteran and Linda were married in January 1983.
5. The veteran and Linda were divorced in December 1985.
6. In September 1991 and March 1992 forms filed with VA, the
veteran reported that he was married.
7. The RO was first informed that the veteran and Linda were
divorced in September 1992.
8. The RO has calculated that the veteran received $6,894.20
in compensation benefits to which he was not entitled.
9. The veteran’s conduct reflects an intent to retain
additional compensation, because of a dependent spouse, after
the date of his divorce; he was aware that his actions would
result in the continued payment of benefits to which he was
not entitled; his conduct resulted in a loss to the
government.
CONCLUSION OF LAW
Consideration of waiver of recovery of the $6,894.20
overpayment is precluded by bad faith. 38 U.S.C.A. § 5107(a)
(West 1991 and Supp. 1996); 38 C.F.R. § 1.965(b) (1996).
REASONS AND BASES FOR FINDINGS AND CONCLUSION
Factual Background
The record reflects that the veteran was first granted
service connection by rating action in February 1968.
Received in September 1969 was a VA Form 21-686C, Declaration
of Marital Status. On the form, the veteran indicated that
he had married Karen in June 1969. A VA Form 20-822, Control
Document and Award Letter reflects that the veteran's
compensation was increased from $248 per month to $268 per
month based on the fact that he had a dependent spouse. The
form also indicates that the veteran was supplied with VA
Form 6755. VA Form 6755, Adjustment of Compensation Award
Because of Change in Number of Dependents, states, “you are
entitled to this award only while your disability, marital
and/or dependency status remains unchanged. You must report
any change in your marital or dependency status immediately.
In July 1976, the veteran submitted a Declaration of Marital
Status form, indicating that he had been divorced from Karen
in December 1973, and that he had married Shirley in April
1975.
A third Declaration of Marital Status form was received from
the veteran in March 1984. On that document, the veteran
indicated that he had been divorced from Shirley since June
1978, and that he had married Linda in January 1983.
In April 1984, the veteran was notified that an overpayment
had been created on his account because of his recent report
that he had been divorced from Shirley since September 1978,
and had not remarried until 1984. The veteran was also
notified that Linda would be added to his award as a
dependent effective April 1, 1984.
In a September 1984 statement, the veteran indicated that he
would be filing for divorce from Linda in the near future,
and that he would submit proof of the divorce once it was
final.
Of record is a February 1985 statement from Linda to the
effect that she had reconciled with the veteran.
On a February 1986 Education Award worksheet, it is indicated
that Linda’s Chapter 35 education benefits were terminated
effective February 16, 1986, the delimiting date of the
veteran's eligibility.
Of record is a VA Form 21-4141 Employment Questionnaire,
which was completed by the veteran in September 1991. On the
form, the veteran reported that Linda was his “wife.”
In March 1992, the veteran completed a VA Form 28-1900,
Disabled Veterans Application for Vocational Rehabilitation.
On the application, the veteran indicated that he had a
dependent spouse.
Received in September 1992 was a statement from Linda to the
effect that she and the veteran had been divorced since
December 1985.
In an October 1992 letter, the RO informed the veteran that
they proposed reducing his benefits effective January 1,
1986, based on the fact that he had divorced Linda in
December 1985.
In December 1992, a copy of the decree of divorce between
Linda and the veteran was received. The decree was dated in
December 1985.
The veteran presented testimony at a hearing at the RO in
November 1992. During the hearing the veteran reported that
he had gone into treatment in January 1986, at which time he
recalled informing VA of his divorce from Linda. He recalled
that at the time of his divorce, he had been drinking and
using drugs, and that he didn’t pay attention to the amount
of compensation benefits he was receiving. He also said that
he was disoriented because of narcotics, alcohol use and a
seizure disorder which he had developed. Thus, he indicates
he never knew that he was receiving extra money for a
dependent spouse.
Of record is a Financial Status Report (FSR), dated in
February 1993. On the FSR, the veteran indicated that he had
monthly income of $2,471 and expenses of $2470. The veteran
reported that of his expenses, he spent $1,315 per month in
debt payments, including $800 per month for “auto repairs.”
In a July 1993 statement, Linda wrote that at the time of her
divorce from the veteran, she was attending school and
receiving VA education benefits. She recalled that she had
notified the campus VA representative about her divorce, and
that her benefits had ended in February 1986. In addition,
she indicated that in 1992, she had obtained a VA
identification card at the veteran's urging. According to
her, the veteran had said it was all right for her to get the
card because of his service and a possible remarriage. She
stated that the veteran was concerned that she have medical
coverage.
Analysis
Initially, the Board has found that the veteran's claim is
well grounded pursuant to 38 U.S.C.A. § 5107 in that his
claim is a plausible claim, one which is meritorious on its
own or capable of substantiation. Murphy v. Derwinski,
1 Vet.App. 78, 81 (1990). Once it has been determined that a
claim is well grounded, VA has a statutory duty to assist the
appellant in the development of evidence pertinent to that
claim. After reviewing the record, the Board is satisfied
that all relevant, available evidence is on file and the
statutory duty to assist the appellant in the development of
evidence pertinent to her claim has been met. 38 U.S.C.A.
§ 5107(a).
Recovery of overpayments of any benefits made under laws
administered by the VA shall be waived if there is no
indication of fraud, misrepresentation, or bad faith on the
part of the person or persons having an interest in obtaining
the waiver and recovery of the indebtedness from the payee
who received such benefits would be against equity and good
conscience. 38 C.F.R. § 1.963(a).
In applying this single standard for all areas of
indebtedness, the following elements will be considered, any
indication of which, if found, will preclude the granting of
waiver:
(1) Fraud or misrepresentation of a
material fact (see § 1.962(b)).
(2) Bad faith. This term generally
describes unfair or deceptive dealing by
one who seeks to gain thereby at
another's expense.
Thus, a debtor's conduct in connection
with a debt arising from participation in
a VA benefits/services program exhibits
bad faith if such conduct, although not
undertaken with actual fraudulent intent,
is undertaken with intent to seek an
unfair advantage, with knowledge of the
likely consequences, and results in a
loss to the government.
(3) Lack of good faith. Absence of an
honest intention to abstain from taking
unfair advantage of the holder and/or the
Government.
38 C.F.R. § 1.965(b).
The record in this case shows that the veteran was single
when he was first awarded VA benefits. When he married his
first wife, the veteran informed VA of the marriage, and he
started to receive extra compensation because he had a
dependent spouse. The veteran was notified of the extra
income and of his duty to inform VA of changes in his marital
status.
In addition, the evidence reflects that the veteran failed to
report his divorce from his second spouse for five and a half
years, resulting in an overpayment.
The current overpayment was created because the veteran
divorced his third wife in 1985, and continued collecting
additional compensation for her until 1992.
The veteran has argued that he remembers informing VA of the
divorce when it took place, and his third wife states that
she independently told VA of the divorce, and that her
education benefits were stopped shortly thereafter. The
veteran also has argued that he was unaware of the extra
money he was receiving for his spouse at the time of his
divorce because he was abusing alcohol and drugs at the time,
and becuase of a seizure disorder.
Despite the arguments presented by and on behalf of the
veteran, however, there is no record that either the veteran
or his third wife ever informed VA of their divorce prior to
1992. It is true that the third wife’s VA education benefits
were terminated in February 1986, however, her benefits were
stopped because the veteran's dependent’s eligibility for
education benefits had run out, not because of the divorce.
As to the veteran's argument that he was unaware of what
benefits he was receiving at the time of the divorce because
of substance abuse problems and a seizure disorder, the Board
notes that many years later, in 1991 and 1992, the veteran
indicated that he was married on forms submitted to VA.
As noted above, bad faith is defined as behavior that is
undertaken with intent to seek an unfair advantage, with
knowledge of the likely consequences, and results in a loss
to the government. In that the veteran had been told that he
was receiving extra benefits for his spouse, and of the duty
to inform VA of changes in marital status, and because the
veteran had an overpayment created in the past because he
failed to report a divorce, it is clear that the veteran
understood that he was receiving extra compensation because
of his married status, and that not reporting the divorce
would result in continued receipt of the extra compensation.
Thus, it is clear that the veteran had knowledge of the
consequences of his failure to report the divorce, namely
that he would continue to receive benefits to which he was
not entitled. The Board notes further that the veteran
indicated in both 1991 and 1992 forms filed with VA that he
had a spouse, when, in fact, he did not, and that the
veteran's third wife indicated that the veteran had advised
her in the past to obtain VA benefits even though they were
not married on the theory that the benefits were deserved
because of his service. These actions indicate an intent on
the part of the veteran to obtain the benefits to which he
was not entitled.
As the veteran acted to take advantage of VA by failing to
report his divorce with knowledge of the fact that he would
continue to receive benefits to which he was not entitled, to
the detriment of the government, the elements of bad faith
have been met, 38 C.F.R. § 1.965(b). As the Board has found
bad faith on the part of the veteran, consideration of waiver
is precluded.
ORDER
Consideration of waiver of recovery of the overpayment of
compensation benefits in the amount of $6,894.20 is precluded
by bad faith on the part of the veteran; the appeal is
denied.
ROBERT E. SULLIVAN
Member, Board of Veterans' Appeals
The Board of Veterans' Appeals Administrative Procedures
Improvement Act, Pub. L. No. 103-271, § 6, 108 Stat. 740, 741
(1994), permits a proceeding instituted before the Board to
be assigned to an individual member of the Board for a
determination. This proceeding has been assigned to an
individual member of the Board.
NOTICE OF APPELLATE RIGHTS: Under 38 U.S.C.A. § 7266 (West
1991 & Supp. 1996), a decision of the Board of Veterans'
Appeals granting less than the complete benefit, or benefits,
sought on appeal is appealable to the United States Court of
Veterans Appeals within 120 days from the date of mailing of
notice of the decision, provided that a Notice of
Disagreement concerning an issue which was before the Board
was filed with the agency of original jurisdiction on or
after November 18, 1988. Veterans' Judicial Review Act,
Pub. L. No. 100-687, § 402, 102 Stat. 4105, 4122 (1988). The
date which appears on the face of this decision constitutes
the date of mailing and the copy of this decision which you
have received is your notice of the action taken on your
appeal by the Board of Veterans' Appeals.
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